Legislature(2001 - 2002)

03/28/2002 08:04 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 483-PROCUREMENT OF GROUP HEALTH INSURANCE                                                                                  
SSHB 315-GROUP HEALTH INSURANCE FOR PRIVATE GROUPS                                                                            
                                                                                                                                
CHAIR COGHILL announced that the  next order of business would be                                                               
the  following  two   bills:    HOUSE  BILL  NO.   483,  "An  Act                                                               
authorizing state  procurement of  group insurance  for employees                                                               
of child care facilities, entities  licensed as residential child                                                               
care  facilities, child  placement  agencies,  foster homes,  and                                                               
maternity houses, and certain adult  residential and day services                                                               
providers,  and  for  employees of  certain  nonprofit  entities;                                                               
repealing a  provision of the  state group  insurance procurement                                                               
law relating to  payment of dividends and  clarifying a provision                                                               
of  that law  relating  to part-time  employees; authorizing  the                                                               
commissioner  of administration  to  adopt regulations  regarding                                                               
state  procurement  of  group insurance;  and  providing  for  an                                                               
effective date"; and  SPONSOR SUBSTITUTE FOR HOUSE  BILL NO. 315,                                                               
"An  Act  allowing employers  that  are  small businesses,  small                                                               
nonprofit  organizations,  or  small associations  for  insurance                                                               
purposes to  join state employee  insurance coverage as  a group;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
CHAIR  COGHILL noted  that  these bills  will  be heard  together                                                               
because he understood that they  [may be] combined in a committee                                                               
substitute (CS) for SSHB 315.                                                                                                   
                                                                                                                                
Number 2311                                                                                                                     
                                                                                                                                
RONNI  SULLIVAN,  Director,  Southern  Region  Emergency  Medical                                                               
Services  Council, testified  via teleconference.   Ms.  Sullivan                                                               
informed the committee that the  Southern Region EMS, a 501(c)(3)                                                               
nonprofit  organization,  is  one  of seven  regions  around  the                                                               
state.  Southern Region EMS  supports the activities of ambulance                                                               
and first  responder services throughout  the region.   There are                                                               
92 ambulance  and first  responder services in  the region.   Ms.                                                               
Sullivan noted that  about 75 percent of the  Southern Region EMS                                                               
funding is received from state  grant funds.  The Southern Region                                                               
EMS has  a staff of ten  employees, eight of which  are full-time                                                               
employees  who are  eligible for  benefits.   The trend  over the                                                               
years has  been increasing  costs and  fixed or  decreasing grant                                                               
funds.     Furthermore,   health  insurance   costs  have   risen                                                               
disproportionately  and perhaps  even more  disproportionately in                                                               
small  businesses with  under  ten employees.    In the  Southern                                                               
Region,  health insurance  rates have  risen by  over 52  percent                                                               
over  the  last  seven  years;  42 percent  of  that  52  percent                                                               
increase occurred last year alone.                                                                                              
                                                                                                                                
MS.  SULLIVAN reiterated  that  Southern Region  EMS  is a  small                                                               
group.  Insurers  really don't want to insure small  groups.  She                                                               
said that  insurers of small  groups have the ability  to provide                                                               
[small  groups]   with  unfair  scrutiny  of   individual  health                                                               
histories.   Whenever  there are  claims against  the policy,  it                                                               
seems that the policy amounts increase  the next period.  For the                                                               
most part, the state bears  the burden of those increases because                                                               
Southern Region  EMS's grant  pays for  its personnel  and health                                                               
care  costs.   Ms. Sullivan  noted that  Southern Region  EMS has                                                               
tried to  live within a  reasonable budget  and even had  to drop                                                               
dependent  coverage  due to  the  increased  cost.   Furthermore,                                                               
coverage  for  Southern  Region EMS  employees  only  covers  the                                                               
employee,  the  deductible  was  raised,  and  the  coverage  was                                                               
decreased.  Little  more can be done.  Ms.  Sullivan informed the                                                               
committee that  for eight employees  she pays $7,000 a  month for                                                               
health care,  which is unreasonably  high.   Unfortunately, there                                                               
is no relief in sight.   Without benefits, she can't keep people,                                                               
she said.   Ms.  Sullivan said  that both [HB  483 and  SSHB 315]                                                               
would provide an  opportunity for Southern Region  EMS to provide                                                               
good  insurance for  a reasonable  price while  saving the  state                                                               
money.                                                                                                                          
                                                                                                                                
MS. SULLIVAN  informed the committee that  most emergency medical                                                               
services  are  nonprofits,  which aren't  associated  with  their                                                               
municipality.   There  have been  problems  with recruitment  and                                                               
retention  of  volunteers  willing  to  take  on  the  degree  of                                                               
responsibility [necessary].   This  has also  been the  case with                                                               
agencies  within  the fire  service.    Therefore, [these  bills]                                                               
would  provide an  opportunity for  those  volunteer agencies  to                                                               
perhaps  have access  to health  insurance.   In conclusion,  she                                                               
urged the committee's support of  both bills whether individually                                                               
or collectively.                                                                                                                
                                                                                                                                
Number 2543                                                                                                                     
                                                                                                                                
MARGARET   LaVIGUEUR,   Homer   Senior  Center,   testified   via                                                               
teleconference.     Ms.  LaViguer  agreed  with   Ms.  Sullivan's                                                               
comments.  She indicated support of "this bill."                                                                                
                                                                                                                                
BILL  HOGAN, Chief  Executive Officer,  Life Quest  Comprehensive                                                               
Mental  Health  Services,  testified   via  teleconference.    He                                                               
informed the  committee that Life Quest  is primarily responsible                                                               
for [providing] most of the  mental health needs of the residents                                                               
of the  Mat-Su Valley.   Life Quest  is funded by  a mix  of both                                                               
state and  federal grants,  contracts, and fees.   Over  the past                                                               
five years, Life  Quest's health care premiums  have increased by                                                               
over 100  percent.  Therefore, a  number of years ago  Life Quest                                                               
was forced to drop employer-funded  dependent coverage because it                                                               
became too  expensive.   The most recent  benefit cycle  with its                                                               
dramatic increase  in premiums forced  Life Quest to  drop dental                                                               
and vision  coverage and  increase deductibles.   With  about 110                                                               
employees,  it's very  difficult to  find affordable  health care                                                               
premiums.    "Our  ability  to   attract  and  retain  qualified,                                                               
effective employees is  compromised by the quality  of the health                                                               
care coverage we're able to provide,"  he pointed out.  Mr. Hogan                                                               
noted support  of the efforts  outlined in SSHB 315,  which gives                                                               
nonprofits such as  Life Quest access to a  larger insurance pool                                                               
that offers the advantage of premium  rates that a large pool can                                                               
command.                                                                                                                        
                                                                                                                                
Number 2685                                                                                                                     
                                                                                                                                
MARY  ROSENZWEIG, Executive  Director, Substance  Abuse Directors                                                               
Association, testified via teleconference.   Mr. Rosenzweig noted                                                               
that she has sent the committee  her testimony.  She informed the                                                               
committee   that  the   Substance  Abuse   Directors  Association                                                               
represents a little  over 50 agencies and  individuals across the                                                               
state  who  provide  substance  abuse  treatment  and  prevention                                                               
services.  The issue of health  insurance has come to the surface                                                               
over  the  past two  years  when  [the association]  conducted  a                                                               
survey of its membership.   On average the premium increases have                                                               
been about 36  percent over that two year period.   However, some                                                               
agencies are experiencing a 100  percent increase over the course                                                               
of a year.   In the two  years of the survey,  the average agency                                                               
per employee premium has increased  from $4,400 to almost $6,000.                                                               
Furthermore, health insurance  is taking a larger  portion of the                                                               
[association's]  operating  budget.   In  the  two years  of  the                                                               
survey, the health  benefit average rose from 5.8  percent of the                                                               
operating  budget  to  7.6  percent   of  the  operating  budget.                                                               
Therefore,  there is  less money  for services.   These  agencies                                                               
haven't received  any increases, inflationary increases,  in more                                                               
than 12  years.  Since many  of the agencies are  providing state                                                               
social services as  a nonprofit grantee, this all  means that the                                                               
state is  able to purchase  less service  with its dollars.   She                                                               
informed  the  committee  that   the  association  has  increased                                                               
deductibles   and  decreased   the  level   of  coverage.     The                                                               
association  has  reached  the  point at  which  recruitment  and                                                               
retention is  a critical mass.   Therefore,  [such organizations]                                                               
are seeking  relief, which  [SSHB 315]  will provide  with little                                                               
cost to the  state.  In conclusion, Ms.  Rosenzweig urged support                                                               
of [SSHB 315].                                                                                                                  
                                                                                                                                
Number 2822                                                                                                                     
                                                                                                                                
FRANK    KEEN,   Health    Insurance   Broker,    testified   via                                                               
teleconference.  He said that  he sees the increasing health care                                                               
costs in  Alaska every day  and thus he encouraged  the committee                                                               
to do what it can  to improve accessibility [to affordable health                                                               
insurance],   especially  for   organizations  that   hire  lower                                                               
compensated  employees who  can't afford  health insurance.   Mr.                                                               
Keen noted  his opposition to  any adverse action on  the current                                                               
Denali  Kid  Care  program.    He  explained  that  many  of  the                                                               
employers that  he serves have  employees and  dependent children                                                               
who  wouldn't  have  any coverage  without  the  availability  of                                                               
Denali Kid Care.  He identified  the biggest problem in Alaska as                                                               
the  lack of  competition.   Mr. Keen  recalled earlier  comments                                                               
regarding  discrimination  against  smaller employers,  which  he                                                               
says  exists.   Therefore, he  said  he believes  that the  state                                                               
should  take action  to prohibit  discrimination against  smaller                                                               
employers.                                                                                                                      
                                                                                                                                
Number 2928                                                                                                                     
                                                                                                                                
FRED JENKINS, Executive Vice President,  United Way of Anchorage,                                                               
testified  via  teleconference.    The United  Way  of  Anchorage                                                               
provides  funding  for  48 nonprofit  health  and  human  service                                                               
agencies  based in  Anchorage.   Mr.  Jenkins said  that he  felt                                                               
confident in saying  [for those 48 nonprofits]  that anything the                                                               
legislature  can  do to  make  health  insurance more  affordable                                                               
would be very  helpful.  Mr. Jenkins explained  that the obstacle                                                               
to affordable health  insurance is probably not the  fault of the                                                               
industry but rather  it's that the insurance  system doesn't work                                                               
well in  Alaska.   The reason the  insurance system  doesn't work                                                               
well  in  Alaska  is  partially  because of  the  small  pool  of                                                               
potential insureds as well as  some of the characteristics of the                                                               
population that "we're  trying to insure."  However,  the lack of                                                               
affordable health  insurance is an obstacle  to nonprofits having                                                               
a stable  workforce.  In  November, Mr.  Jenkins did a  survey of                                                               
the 48  funded nonprofits  with which  he works.   He  offered to                                                               
submit [the results] in writing.                                                                                                
                                                                                                                                
TAPE 02-33, SIDE B                                                                                                              
                                                                                                                                
MR.  JENKINS  related [from  the  findings  of his  survey]  that                                                               
premium costs averaged $6,000 per  employee, which can only rise.                                                               
United Way of Anchorage experienced  a 40 percent increase in its                                                               
insurance  coverage this  year.   Mr. Jenkins  announced that  he                                                               
would support  any integration of SSHB  315 and HB 483  [with the                                                               
addition of]  the category for  special service  organizations to                                                               
the bill.   He encouraged  the committee  not to limit  access to                                                               
the plan  to organizations who  have large numbers  of employees.                                                               
Many nonprofits  have large employee  bases because  they operate                                                               
multi-site  childcare or  residential  treatment facilities  that                                                               
have to  be staffed on a  24-hour basis.  However,  the number of                                                               
employees in an  organization's base isn't an  indicator of their                                                               
ability to afford insurance.                                                                                                    
                                                                                                                                
MR.  JENKINS   informed  the  committee  that   Dennis  McMillan,                                                               
President, United Way  of Anchorage, has worked  closely with the                                                               
Departments  of Health  &  Social  Services, Administration,  and                                                               
Commerce & Economic Development in  order to develop solutions to                                                               
this problem.   However, the major factor  in accessing insurance                                                               
is affordability.   Any  help that the  legislature can  offer in                                                               
that vein would be appreciated.                                                                                                 
                                                                                                                                
CHAIR COGHILL noted that the  committee substitute (CS) that will                                                               
be adopted soon does include the special service organizations.                                                                 
                                                                                                                                
Number 2875                                                                                                                     
                                                                                                                                
CANDACE  WINKLER,   Associate  Executive  Director,   Child  Care                                                               
Connection, testified  via teleconference in support  of amending                                                               
SSHB 315 as proposed.  Ms.  Winkler informed the committee that a                                                               
four-year-old  recently illustrated  the child  care crisis  when                                                               
that  child asked  the question,  "Mommy,  who's going  to be  my                                                               
teacher today?"   This  child had three  teachers in  six months.                                                               
As  an  advocate  for  children and  child  care  providers,  Ms.                                                               
Winkler was  disturbed by that  comment.  The turnover  rate [for                                                               
child care  providers] is  49 percent.   She attributed  the high                                                               
turnover  rates to  inadequate pay  and lack  of benefits.   Most                                                               
child care providers  earn between $16,000-$19,000 a  year.  Half                                                               
of all  child care providers  are living below the  poverty level                                                               
and less than a third of them have health insurance.                                                                            
                                                                                                                                
MS. WINKLER  emphasized that child  care providers  are important                                                               
to  Alaska's economy.   Currently,  two-thirds  of families  with                                                               
children have  two working parents.   Furthermore, 65  percent of                                                               
mothers  with  children  under  six are  working.    Ms.  Winkler                                                               
highlighted  the  importance child  care  providers  have on  the                                                               
future of the children with  which they have contact.  Currently,                                                               
there are approximately 5,000 child  care workers in Alaska.  Ms.                                                               
Winkler said:                                                                                                                   
                                                                                                                                
     For us to  be able to provide  consistent, quality care                                                                    
     to kids,  it's important  for us to  be able  to retain                                                                    
     staff  members   who  have  the  experience   in  child                                                                    
     development.   We  can  only do  that  by making  their                                                                    
     lifestyle healthier  by providing  them with  access to                                                                    
     health insurance.  And by  promoting the health of  the                                                                    
     child care  providers, we're wisely investing  in those                                                                    
     who care for  and refine Alaska's children.   Please do                                                                    
     what you  can to support  this bill and to  support the                                                                    
     people who are working on  the front lines to raise our                                                                    
     kids.                                                                                                                      
                                                                                                                                
CHAIR  COGHILL apologized  that  the committee  wouldn't be  able                                                               
take further testimony today.                                                                                                   
                                                                                                                                
Number 2725                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE moved to adopt  CSSSHB 315, LS1177\O, Craver,                                                               
3/27/02,  as the  working document.   There  being no  objection,                                                               
Version O was before the committee.                                                                                             
                                                                                                                                
CHAIR COGHILL  announced that he wouldn't  close public testimony                                                               
today.                                                                                                                          
                                                                                                                                
Number 2678                                                                                                                     
                                                                                                                                
REPRESENTATIVE   NORMAN  ROKEBERG,   Alaska  State   Legislature,                                                               
testified as the sponsor of SSHB  315.  He explained that Version                                                               
O adopts  the concept of  special service organizations  and thus                                                               
allows people who are sole  proprietors to participate.  The bill                                                               
contains a litany of groups covered  and defined.  He pointed out                                                               
that  Section 5  changes the  effective  date from  July 2003  to                                                               
January 3,  2003, due  to the significant  demand for  this bill.                                                               
Section   4  changes   the  small   business  organization   size                                                               
requirement of  300 eligible employees to  50 eligible employees.                                                               
He explained  that he has  spent the  last eight years  trying to                                                               
create  an environment  in which  private insurance  underwriters                                                               
can enter  the state.   Therefore, he  is sensitive to  the group                                                               
that will  be created and the  type of competition there  will be                                                               
with the  private sector.   This  bill creates  a new  group that                                                               
will be under a private plan.   Therefore, it avoids the mingling                                                               
of private  people with state  employees, which  could jeopardize                                                               
the  governmental exemption  under  the  Employee Retirement  and                                                               
Income Security Act of 1974 (ERISA).   The provisions of the bill                                                               
provide a bidding process under the private sector.                                                                             
                                                                                                                                
CHAIR COGHILL  noted that he  will be  inquiring as to  the [make                                                               
up]  of  the  pool;  its access;  and  [interaction]  with  other                                                               
insurance areas under ERISA.                                                                                                    
                                                                                                                                
Number 2517                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON,  sponsor of HB  483, said she  was pleased                                                               
that Representative  Rokeberg was willing  to look at  both bills                                                               
and  consider  what  could  be  done for  those  in  the  special                                                               
services  organizations.    She  expressed her  pleasure  in  the                                                               
merging of the two bills.  [HB 483 and SSHB 315 were held over.]                                                                

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